House prices across the UK exhibited both resilience and caution at the close of 2024, as revealed by the latest data from Halifax. The Halifax House Price Index for December 2024 shows the average price of homes rose by 3.3% year-on-year, reaching £297,166, marking the end of the year on a high note, even as prices dipped by 0.2% month-on-month, the first decline after five months of growth.
According to Amanda Bryden, head of mortgages at Halifax, the housing market maintained broad stability throughout the year. "Prices fell back slightly in December, by 0.2%, following five consecutive monthly increases. The housing market was broadly steady at the start of 2024, with house price growth accelerating from the summer onwards," Bryden explained.
That growth was partly fueled by falling mortgage rates, which eased financial pressures for buyers. Bryden also highlighted upcoming changes to stamp duty, effective from April 2025, where the 'nil rate' band for first-time buyers will decrease from £425,000 to £300,000. This shift is expected to spark urgency among potential buyers eager to take advantage of current prices before the new thresholds take effect.
Despite the dip, the housing market's performance was relatively strong. Experts believe the end-of-year figures show significant resilience. "December 2024 was one of the busiest Decembers we've seen for buyer demand, driven largely by first-time buyers wanting to secure their place before the stamp duty changes," stated Matt Thompson, head of sales at London-based estate agent Chestertons.
Regionally, Northern Ireland demonstrated the highest annual growth rate, climbing 7.4% to reach an average of £205,895. Other areas also experienced notable price increases, including Wales at 4.6% and the North West of England at 5.3%. Contrast this with London, retaining the highest average house price at £547,614, reflecting only 3.3% growth year-on-year.
This mixed bag of statistics provides insight not only on the recovery of the housing market but also about the pressures it faces moving forward. Experts warn of potential slowdowns if lending becomes more constrained due to the upcoming changes to stamp duty and the slow predicted pace of rate reductions by the Bank of England. Bryden noted, "Mortgage affordability will remain a challenge for many, especially as the Bank of England base rate is likely to come down more slowly than previously predicted."
Many market analysts, like Karen Noye, mortgage expert at Quilter, voiced concerns about the potential impact on first-time buyers. "Piling on additional affordability pressures at such a challenging time could lead to reduced purchases, which might slow transactions and stall chains across the market. If buyers begin delaying their purchases, we could see a 'gluing up' effect where sales slow significantly due to the uncertainties involved," she stated.
On the brighter side, lenders have begun reducing certain mortgage rates. Mark Harris of SPF Private Clients noted, "The new year has got off to an encouraging start, with some lenders, including HSBC and Halifax, lowering their rates. Borrowers will be hoping this trend continues throughout 2025."
Such sentiments are echoed by Nathan Emerson, CEO of Propertymark, who expressed optimism about the upcoming months. "With many people feeling more settled financially and preparing for the stamp duty increases, we expect to enter 2025 on a confident note. If employment conditions remain steady, buyer demand should maintain resilience.”
Despite the slight dip observed, housing market professionals advise potential buyers to act strategically as the market continues to evolve with changing economic conditions. Jonathan Hopper, CEO of Garrington Property Finders, reasoned, "December’s dip might be little more than a pause for breath before the January bounce. The early days of 2025 have already shown signs of pent-up demand, especially among prospective first-time buyers eager to finalize their purchases before the anticipated tax changes."
Indeed, the broader sentiment about the UK housing market rests on various interlinked factors such as interest rates, stamp duty reforms, supply and demand dynamics, and prevailing economic conditions. Experts like Tom Bill from Knight Frank indicate future growth might come under strain as the ramifications of the new Budget start to affect lending and market activity, stating, "We’ve revised our house price forecast for 2025 to 2.5% due to the tougher lending conditions posed by the Budget."
For now, potential buyers and industry observers remain watchful, considering how the outcome of these developments will shape the UK housing market as it heads resolutely toward 2025. The combination of buyer demand, lender practices, and government policy updates sets the stage for what many hope will be another year of market stabilization and gradual recovery.